Detroit urged to tie water bills to income

Detroit’s Water and Sewerage Department estimates about 20,000 to 25,000 residential accounts are delinquent, and that more than 29,000 water department customers are on payment plans.(Photo: Joshua Lott / Getty Images)

Reacting to water shutoffs and rising rates, Detroit activists are pushing for an income-based water affordability plan, saying a system that’s being considered in Philadelphia could help customers and the city water department.

Detroit’s Water and Sewerage Department estimates about 20,000 to 25,000 residential accounts are delinquent, and that more than 29,000 water department customers are on payment plans.

Last year, the department’s campaign to collect millions of dollars in unpaid bills led to more than 30,000 shutoffs and a backlash that drew national attention.

An affordability plan would cap rates for lower-income customers below what’s charged to other system users.

But there are significant legal, financial and philosophical obstacles standing in its way.

Supporters say such a system would protect poorer customers from losing water service and could even boost revenue for the water department because residents who now pay nothing would at least pay something.

“It would help alleviate some of the problems many Detroiters are facing,” said DeMeeko Williams, political director of the Detroit Water Brigade, a volunteer group that helps families facing water shutoffs. “Most people want to pay their bills, but they can’t pay them when they’re $3,000 or more.”

Tawana Petty, an organizer with the People’s Water Board Coalition, said last week it’s long past time for a water affordability plan.

“Philadelphia has moved to give its residents the tools they need to avoid massive shutoffs,” she said in a statement. “Detroit families deserve no less.”

Some experts say the idea could work in Detroit, but others say it isn’t practical.

“There’s no reason that it wouldn’t be feasible in Detroit,” said Roger Colton, a Belmont, Massachusetts-based economist who worked on a water affordability plan for Detroit about a decade ago.

Colton suggested under such a plan, a resident earning below 150 percent to 175 percent of the federal poverty level — $24,250 a year for a family of four — would be eligible to pay between 2 percent and 5 percent of his monthly income for water service.

In Detroit, 270,659 people, or 39.3 percent of the city’s population of 688,700, live below the poverty line, according to the U.S. Census Bureau. In Philadelphia, 411,589 people, or 26.5 percent of the population of 1.6 million, fall below the poverty line.

“What the affordability (program) does, and will do, is increase the amount of revenue that the department would collect, and decrease (collection) expenses,” Colton said.

Sharmila Murthy, an assistant professor of law at Suffolk University Law School in Boston, believes a plan like Philadelphia’s would make sense for Detroit — and for other cities.

“The Philadelphia plan is modeled after what’s happening in the energy sector,” she said. “The water sector has just been slow to adopt them.”

However, Eric Rothstein, a Chicago-based consultant for the Detroit Water and Sewage Department, said there’s one big problem: Water affordability plans aren’t currently legal in Michigan.

“An affordability plan where someone pays for services based on what they can afford to pay when other people pay more for the same level of service is unconstitutional,” said Rothstein, a principal with the Galardi Rothstein Group.

“Michigan’s Supreme Court has ruled charging some utility customers one rate while others paid more constituted a tax on the group paying more.”

Customers must bear costs

Michael Deane, executive director of the National Association of Water Companies, said the costs of maintaining and replacing pipes and other water infrastructure have to be covered by customers.

“People don’t understand that, because it’s out of sight, out of mind,” he said. “But if utilities don’t recover those costs, then they have to defer certain investments, which means their facilities aren’t getting upgraded, and that’s not sustainable in the long run.”

Detroit City Council approved a water affordability plan in 2006, but legal concerns led the administration of then-Mayor Kwame Kilpatrick to shelve the idea.

But the recently approved lease of Detroit’s water and sewer system to a new regional entity, the Great Lakes Regional Water Authority, has persuaded some advocates it’s time to try again.

City Council’s approval of a 7.5 percent rate increase late last month also spurred supporters of the idea to action, including Councilwoman Raquel Castaneda-Lopez, who voted against the hike. She joined activists at a July 29 news conference to promote an affordability plan.

“Detroit families deserve the same opportunity as those in Philadelphia to have a system that takes into account a person’s ability to pay, to help prevent shutoffs,” she said at the time.

Philadelphia’s plan calls for the city’s Water Revenue Bureau, which handles billing and collections for its water department, to offer income-based payment plans to low-income residential customers and those who demonstrate a financial hardship.

Other utilities in the city, including the Philadelphia Gas Works and PECO, formerly the Philadelphia Electric Company, have similar programs.

City Councilwoman Maria Quinones Sanchez introduced legislation in June 2014. The City Council approved it June 18, 2015 — the body’s last day in session before its summer break — and sent it to Mayor Michael Nutter, who has yet to act on it.

Under the plan, low-income customers can be enrolled in a special assistance program after providing proof of income. Enrolled customers will be able to get past-due bills forgiven over time.

Publicity leads to legislation

Anthony Campisi, a spokesman for Quinones Sanchez, said the councilwoman’s legislation was prompted partly by last year’s headlines about the Detroit water shutoffs.

Mark McDonald, Nutter’s press secretary, said the administration is reviewing the legislation and talking to stakeholders.

Under the city charter, he said, the mayor has until council reconvenes in September to sign the legislation, veto it or let it become law without his signature.

Campisi said if enacted, the program likely won’t begin until next year. More than 170,000 residential properties in Philadelphia had tax liens for overdue water bills at one time, he said.

Donations running out

In Detroit, activists say there is urgency behind the issue: Funding from charities to help the city’s needy pay their water bills is drying up.

For example, a $1 million donation the Heat and Warmth Fund received in May for its first-ever water bill assistance program has been exhausted, said Shaun Wilson, a THAW spokesman.

The agency has launched a campaign to replenish the program’s funds, he said.

In the meantime, Detroit residents like Dekota Booker who are behind on their water bills are worried their service will be shut off. Booker, 44, said she’s a cancer survivor whose only source of income is Social Security disability.

“My water is still on right now, but they told me they’re going to cut it off in a month if I don’t come up with $700,” she said. “I tried getting help from those other places, but they said all of the money was gone.”